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South Asia Investor Review is focused on reporting, analyzing and discussing the economy and the financial markets of countries in South Asia, including Pakistan, Bangladesh and Sri Lanka. For investors looking to invest in emerging markets beyond BRIC countries (Brazil, Russia, India and China), this blog is designed to help international investors looking to learn about investing in South Asia with focus on Pakistan. Riaz has another blog called Haq's Musings at http://www.riazhaq.com

Pakistan Population Boom; Rohingya Ethnic Cleansing

Is Pakistan's growing population a "disaster in the making"? Is it a bigger disaster than the population bust in Europe and East Asia with their aging societies and shrinking labor force? Where will the investment in education, health and job creation come from in Pakistan to meet the growing population? Is there a demographic dividend with Pakistan's labor force growing faster than the overall population? Will growth in labor force help increase domestic savings rate in Pakistan? What is the relationship between GDP growth and job creation? What is Pakistan's employment elasticity relative to other nations in South Asia?

Who are the Rohingya? Why are they being attacked, raped, killed and driven out of their homes in Rakhine state? Why is the Myanmar government and its allied Buddhist militias, including monks, burning Rohingya villages? Is it a "textbook example of ethnic cleansing" as described by the UN Human Rights chief? Why is Nobel Peace laureate Myanmar leader Aung San Suu Kyi defending these actions instead of using her authority, at least her moral authority, to end this nightmare for the Rohingya? What is the world doing about t? What can and should Pakistan and other Muslim nations do to help their fellow Muslim Rohingya?

Source: Aljazeera

Viewpoint From Overseas host Misbah Azam discusses these and other questions with panelists Ali H. Cemendtaur and Riaz Haq (www.riazhaq.com)

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Growth in a number ofcountries in South Asia, including Bangladesh andPakistan, appears to have benefited in recent yearsfrom new opportunitieslinked to the “One Belt, OneRoad” initiative in China.The gradual slowdown of China is expected to continueasit moves ahead with rebalancing its economy,towards domestic markets. However, the explosion ofdomestic debtsince the crisisis proving a major challengeto sustained growth. According to comparabledata from the Bank for International Settlements, thedebt-to-GDP ratio of China stands at 249 per centas compared with 248 per cent in the United Statesand 279 per cent in the euro zone. Despite this debtbuild-up, which calls for deleveraging, every timethere are signs of a slowdown the only instrumentin the hands of the Chinese Government seems tobe to expand credit. Fears of a hard landing resultedin a ¥6.2 trillion increase in debt in the first threemonths of 2017.9The Indian banking sector, too, which since 2003has expanded credit to the retail sector (involvingpersonal loans of various kinds, especially those forhousing investments and car purchases) and to thecorporate sector (including for infrastructure projects),is now burdened with large volumes ofstressedand non-performing assets. Data for all banks(publicand private), relating to December 2016, point to a59.3 per cent increase over the previous 12 months,taking it to 9.3 per cent of their advances, comparedwith a non-performing assets (NPAs) to advancesratio of 3.5 per cent at the end of 2012.10Rising NPAs are making banks much more cautiousin their lending practices with signs of a reduction inthe pace of credit creation. Since debt-financed privateinvestment and consumption was an importantdriver of growth in India, it is more than likely that theeasing of the credit boom would slow GDP growth aswell. Thus, the dependence on debt makes the boomin China and India difficult to sustain and raises thepossibility that when the downturn occurs in thesecountries, deleveraging will accelerate the fall andmake recovery difficult. Expecting these countriestocontinue to serve asthe growth polesthat would fuela global recovery is clearly unwarranted.

Two years ago, India was indeed touted as a rare bright spot in a dim global economy. Its growth had outpaced that of a slowing China, and Mr Modi’s government briefly revelled in India’s status as the world’s fastest-growing large economy. Many expected India to enjoy a sustained economic boom. That hope was not realised. Since early 2016, Indian growth has slowed consistently. In the quarter ending June 30, gross domestic product growth fell to 5.7 per cent — its slowest since early 2014, the doldrums of the previous Congress government. July’s index of industrial production has also surprised economists, up just 1.2 per cent, with 15 of 23 industries contracting. New Delhi insists that the downturn is temporary — a wobble due to reforms such as the July 1 introduction of a national value added tax. But many economists suggest India is facing serious structural problems from which it is unlikely to recover rapidly. Companies and banks remained weighed down in high levels of stressed debt. Exports — which helped drive growth after Mr Modi took over — have faltered. Private investment has fallen steadily since early 2016 with little sign of imminent pick-up. “The reasons why corporates are not investing is because there is no demand,” says Jahangir Aziz, head of emerging markets analysis at JPMorgan. “India, like every other emerging market, is dependent on foreign demand to drive its growth. Foreign demand went down, and India did not replace it with an alternative.” Since taking power, Mr Modi’s economic vision has centred on boosting India’s appeal and competitiveness as a manufacturing base — to encourage more companies to “Make in India”. He vowed to revive long-stalled infrastructure projects, including those mired in unsustainable debt. He has talked of slashing red tape to improve the ease of doing business. His government has pushed through the new goods and services tax, which is turning the country into a genuine single market. Raghuram Rajan on India's economic slide Play video But in a world of excess global manufacturing capacity, some suggest that New Delhi’s focus on promoting India as an export-oriented manufacturing base may not deliver the expected results. “When global trade is languishing, it’s very difficult for India to stand up and say we are going to take market share away from China,” says Mr Aziz. “Everybody is fighting for a smaller and smaller pie.” It does not help that the rupee has also appreciated strongly, rising 6 per cent against the dollar this year, as relatively high interest rates compared with other markets attract capital inflows. Many economists argue the currency is overvalued — an argument so far dismissed by New Delhi. “Countries often make a mistake and take pride in the stronger currency, and that is a very risky thing,” says Kaushik Basu, who served as chief economic adviser to India’s previous Congress government. “The rupee in real terms has become strong and that is showing up in exports not doing well and imports picking up a bit too rapidly.”The introduction of India’s goods and services tax has undoubtedly damped short-term economic impact, as many manufacturers ran down their stocks amid uncertainty about how the government would give tax credits for goods made before July 1. “Everybody started reducing inventory levels,” says Gaurav Daga, whose business imports plastic polymers used to make goods ranging from shoes to cables to auto components. “Nobody had any clarity about the transition credits.” But many say India’s economy is also reeling from the aftershocks of last year’s radical demonetisation, when Mr Modi banned the use of nearly 86 per cent of the country’s cash, severely disrupting daily life and commerce. ’

Six-member delegation from China's Hi-Tech Group, a state owned company dealing in textile and energy generation machinery, Tuesday visited FPCCI and had sector specific detailed discussion with their counter-parts on, how to upgrade Pakistan's textile industry especially the spinning mills.

Eighty percent of yarn and other textile products will be re-exported to China for value-addition to sell the finished good at better prices in international market, Pakistani businessmen were informed.

Led by Executive Director of the Group, Shaohul Zhang, the Chinese delegation is on 5-day visit to Pakistan from September 17. On Wednesday, they would fly to Lahore for business sessions with the textile industry people.

Acting President, Federation of Pakistan Chambers of Commerce and Industry, Manzoor-ul-Haq Malik and senior leader of FPCCI and a leading textile industrialist and exporter Dr. Mirza Ikhtiar Baig along with other senior businessmen welcomed the Chinese team at the Federation House. Mr. Malik and Dr. Baig led the FPCCI team.

Chinese were keen to enter joint ventures for modernization and upgrdation of Pakistan's spinning mills to make these cost efficient and competitive, Mr Zhang said.

They wanted to start with installing one million spindles at least at one spinning mill, which was the lowest benchmark for a spinning mill in China.

Whereas, in Pakistan majority spinning mills had spindles only in hundreds.

For such large size spinning mills, China's Hi-Tech Group would help set up power plants to meet its power consumption demand at very reasonable price. Spinning mills are the largest power consuming industry.

Head of the Chinese delegation informed that China wanted to relocate its textile units to Pakistan to benefit from Pakistan's low paid and well-experienced textile labour. Chinese investors were ready to set up their textile mills in Pakistan, mostly under joint ventures, especially at Special Economic Zones linked to China- Pakistan Economic Corridor (CPEC).

" We can contribute in power supply at very favourable price. There can be very good partnership in spinning mills and power plants owners," he remarked adding that give us land, we will bring textile machinery here.

He claimed that China's textile machinery was more suitable for Pakistan against that of Germany and Switzerland.

He said under the proposed programme, most of the small Pakistani spinning units would have to be shutdown as those were not cost efficient and led to wastage of very good quality cotton stock.

The main points harvested from the meeting were : there was a big demand in China for Pakistani yarn-- Pakistan should produce 8 singles cotton instead of 6 singles. Cotton yield per acre should be increased-- China wants Pakistan to shift to an economy of scale including large size spinning mills, and Chinese investors were very much interested to become partners in textile -- Pakistan's textile sector needs to corporatised instead of being confined to as family businesses. These should be listed with Pakistan Stock Exchange as public limited companies -- the policies were required to protect the existing local textile industrialists and that even the existing textile units could continue profitably if those were not be re- located-- eighty percentage of the textile products would be re- exported to China for value addition. China was the large market for yarn and Pakistan could capture a big share-- Pakistan textile sector should contact Chinese government for the support including easy financing.

Chinese companies from different cities and provinces have expressed their interest in relocating their textile, garment and accessory production units to Punjab, with an expected investment of at least $25 million estimated for each unit.

This was stated by Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Central Chairman Ijaz Khokhar at the three-day 18th International Textile Asia Exhibition. Besides marking the participation of over 500 foreign delegates, the exhibition also witnessed signing of MoUs worth $375 million for investment in Pakistan through joint ventures with local companies

Speaking on the occasion, Khokhar said that foreign companies are also committed to transfer their technologies, besides buying back Pakistani products after value-addition here, which would enhance export and lower Pakistan’s trade deficit with China.

Quoting the Chinese, he said, “We will make joint ventures with local companies from Gujranwala, Lahore, Sialkot and Faisalabad, and provide training to engineers from these cities and buy back products to export to China.”

The event was jointly organised by PRGMEA and Ecommerce Gateway Pakistan, who also signed an agreement to continue to jointly conduct this mega textile event in the future on an annual basis.

The PRGMEA chairman announced this on the last day of the exhibition. In his concluding remarks, he said that around 52,000 trade visitors registered their presence in the textile fair in three days.

Also present on the occasion, PRGMEA Vice Chairman Jawwad Chaudhry said that machinery and equipment displayed at the exhibition were of immense use to manufacturers producing value-added products for increasing volume of exports.

He hoped that local businessmen would benefit from this technology by adding value to their products.

He said that the Textile Asia Expo also featured businessmen to businessmen (B2B) meetings, a lot of important industry-related presentations and seminars on textile sector.

Chaudhry observed that the entire chain of the local textile sector was invited to attend the country’s largest textile show. The exhibiting countries included Austria, China, Czech Republic, France, Germany, India, Italy, Korea, Taiwan, Turkey, UK and USA among others.

The exhibition is aimed at focusing the Punjab potential of textile and garment machinery, accessories, raw material supplies, chemicals and allied services under one roof, as around 80% of textile industry is located in this province, Nizam added.

The exhibition also provided an effective platform for joint ventures and collaborations to the textile sector’s SMEs, he remarked.

The CEO observed that the three-day mega fair provided the local small textile industry a good opportunity where more than 315 international brands from around 27 countries displayed their products in more than 515 stalls.

He swept to power three years ago promising India’s poor and middle classes he’d restore their "dignity" after years of swelling inequality, with job creation central to his pitch. But now, the jobs market has been slugged by last November’s shock cash ban and July’s imposition of a goods and services tax.

And things look like they’re about to get worse: India is set to see a further 30 percent-to-40 percent reduction of jobs in the manufacturing sector compared with last year, according to TeamLease Services Ltd., one of the country’s biggest recruitment firms. While other surveys aren’t quite so bleak, they also suggest Modi is a long way from creating the 10 million jobs a year needed to keep up with his young and rapidly expanding workforce.

The opposition -- in disarray since losing to Modi -- is dialing up its criticism as it eyes elections due in 2019.

"If India cannot give the millions of people entering the job market employment, anger will increase, and it has the potential to derail what has been built so far," Rahul Gandhi, heir-apparent to the main opposition Indian National Congress party, said in a speech at the University of California, Berkeley, on Sept. 11. "That will be catastrophic for India and the world beyond it."

Gandhi is the son and grandson of previous prime ministers, and could well be Modi’s direct opponent at the next vote.

Modi’s backers are alarmed too. A key ally and member of Modi’s party, Subramanian Swamy, told a TV channel over the weekend that he has conveyed concerns to Modi that the economy could be heading for a "major depression."

The Rashtriya Swayamsevak Sangh -- the ideological parent of Modi’s ruling Bharatiya Janata Party that works like a volunteer wing to ensure voter turnout during elections -- has alerted the BJP of signs of a shift in the public mood over the government’s performance, though Modi still remains personally popular, according to a report in the Telegraph newspaper last week that cited unnamed RSS sources.

Read: India’s Shock Therapy Has Some Serious Side Effects

Munira Loliwala, a general manager at TeamLease, said the slowdown accelerated sharply with demonetization. Indian manufacturers, who previously preferred to cut white-collar jobs rather than factory-floor workers, are now slashing all over, she said.

"We see no option, things are not looking to improve much," Loliwala said.

Loliwala was referring to Modi’s move in November to scrap 86 percent of currency in circulation, which contributed to growth in gross domestic product slumping to the lowest since 2014 last quarter. Modi then pushed through a nationwide goods and services tax on July 1, which is expected to benefit India in the long-run but for now is roiling supply chains.

Manufacturing accounts for some 18 percent of GDP and directly employs 12 percent of the population, government data show. Loliwala said that many of those who lose their jobs stay unemployed because they lack the communication skills required for the services sector, which accounts for 62 percent of GDP.

Sen Bernie Sanders: The War on #Terror ‘Has Been a Disaster for the #American People’ #Terrorism http://thebea.st/2fk4FyL?source=twitter&via=desktop … via @thedailybeast

Sanders’ biggest foreign policy speech yet will defend the Iran Deal, call out Putin, and blast the struggle against global jihadism as giving terrorists ‘exactly what they want.’

Fresh from pulling the Democratic Party leftward on health care, Bernie Sanders wants to do the same on geopolitics. The independent socialist senator will use a Thursday speech at Westminster College in Fulton, Missouri—where Winston Churchill gave his famous “Iron Curtain” address—to catalyze an intra-progressive debate on foreign-policy principles.It’s a speech likely to make waves. Like U.K. Labour leader Jeremy Corbyn before him, Sanders will call the war on terrorism a “disaster,” The Daily Beast has learned.“The Global War on Terror has been a disaster for the American people and for American leadership,” Sanders will say Thursday in perhaps his biggest foreign-policy speech to date, according to an excerpt seen by The Daily Beast.

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The Lahore studio will be led by Ammar Zaeem, cofounder of Pakistan’s mobile game studio Caramel Tech which already has a team of 50 engineers.
The move is a big investment into Pakistan as a tech hub, and it shows how the game business is expanding around the globe.

Cloudcade:

Founded by Di Huang in 2013, Cloudcade is known for its popular multiplayer game "Shop Heroes" that pits players against each other in a competition to create the best shop they can. If a player can make a better store and perform more tasks than his or her rivals, he or she wins.

The game is available on the Apple iOS App Store, Google Play, Samsung Galaxy Store, Amazon, Kongregate, and Facebook. It is now also supported on the Apple Watch.

43.5% of Indians, the highest percentage in the world, say they do not want to have a neighbor of a different race, according to a Washington Post report based on World's Values Survey.

About Pakistan, the report says that "although the country has a number of factors that coincide with racial intolerance – sectarian violence, its location in the least-tolerant region of the world, low economic and human development indices – only 6.5 percent of Pakistanis objected to a neighbor of a different race. This would appear to suggest Pakistanis are more racially tolerant than even the Germans or the Dutch".

Housing Discrimination:

It appears that there is a small but militant minority in Pakistan that is highly intolerant, but the vast majority of people are tolerant. My own experience as a former Karachi-ite is that there is little or no race or religion based housing segregation, the kind that is rampant in India where Muslims are not welcome in most Hindu-dominated neigh…

Pakistan's human development ranking plunged to 150 this year, down from 149 last year. It is worse than Bangladesh at 136, India at 130 and Nepal at 149. The decade of democracy under Pakistan People's Party and Pakistan Muslim League (Nawaz) has produced the slowest annual growth rate in the last 30 years. The fastest growth in Pakistan human development was seen in 2000-2010, a decade dominated by President Musharraf's rule, according to the latest Human Development Report 2018.

Human Development in Pakistan:

UNDP’s Human Development Index (HDI) represents human progress in one indicator that combines information on people’s health, education and income.

Pakistan saw average annual HDI (Human Development Index) growth rate of 1.08% in 1990-2000, 1.57% in 2000-2010 and 0.95% in 2010-2017, according to Human Development Indices and Indicators 2018 Statistical Update. The fastest growth in Pakistan human development was seen in 2000-2010, a decade dominated by President M…

I am the Founder and President of PakAlumni Worldwide, a global social network for Pakistanis, South Asians and their friends. I also served as Chairman of the NEDians Convention 2007. In addition to being a South Asia watcher, an investor, business consultant and avid follower of the world financial markets, I have more than 25 years experience in the hi-tech industry. I have been on the faculties of Rutgers University and NED Engineering University and cofounded two high-tech startups, Cautella, Inc. and DynArray Corp and managed multi-million dollar P&Ls. I am a pioneer of the PC and mobile businesses and I have held senior management positions in hardware and software development of Intel’s microprocessor product line from 8086 to Pentium processors. My experience includes senior roles in marketing, engineering and business management. I was recognized as “Person of the Year” by PC Magazine for my contribution to 80386 program. I have an MS degree in Electrical engineering from the New Jersey Institute of Technology.
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